DESI FMCG PATAN­JALI EYE­ING GLOBAL MAR­KET

Harid­war based Patan­jali Ayurved is a lead­ing FMCG com­pany now. Co-founder and CEO Acharya Balkr­ishna, with 96 per­cent stake, is driv­ing the growth of the com­pany. In a can­did in­ter­view with BK Jha, the CEO tells about the growth story

First of all, the mar­ket buzz is- Patan­jali for­ays into global mar­ket. Is this cor­rect?

Yes, Patan­jali’s plans of go­ing global in the near fu­ture. Though our fo­cus and pri­or­ity is to pro­vide top qual­ity af­ford­able prod­ucts to do­mes­tic con­sumers, the com­pany plans to go global and a unit in Nepal is just a be­gin­ning of that. After Nepal, China could pos­si­bly be among the other des­ti­na­tions as Patan­jali’s prod­ucts are very pop­u­lar there, though sent through ‘ dif­fer­ent’ chan­nels and not ex­ported by us.

In­dus­try Cham­ber FICCI or­gan­ised this 'Made in In­dia – Food Buyer Seller Meet' . How do such event help the food sec­tor play­ers

The ini­tia­tive taken by FICCI is an ex­am­ple of in­dus­try play­ers tak­ing a step to­wards mak­ing In­dian food in­dus­try an in­ter­na­tional brand ac­cepted by all. Patan­jali Ayurveda Ltd. is com­mit­ted to go global and fight adul­ter­ation in Food in­dus­try. We want healthy In­dia. Hence at each such con­fer­ence I urge the food sec­tor play­ers to come to­gether and fight against adul­ter­ation.

What is your view on ‘ Make in In­dia’ ?

Patan­jali al­ready has its pres­ence in many coun­tries thereby giv­ing a push to Prime Min­is­ter Naren­dra Modi's drive of Make in In­dia. The com­pany is mak­ing its all In­dia pres­ence by open­ing pro­cess­ing units for sev­eral dif­fer­ent prod­ucts in the coun­try. Re­cently, we have set up a pro­cess­ing plant in Tezpur, other units are com­ing up at NOIDA, Nagpur, In­dore, Hy­der­abad. At Nagpur, we are set­ting up or­ange pro­cess­ing unit. Hope­fully, pro­duc­tion from th­ese units would start in the cur­rent fis­cal year.

Would you elab­o­rate about in­vest­ments be­ing made for set­ting up such units ?

Gain­ing a larger mar­ket share in

the highly-com­pet­i­tive do­mes­tic FMCG space is a chal­leng­ing task and needs huge in­vest­ment. The com­pany will in­vest around a to­tal of Rs 1,300 crore to set up a fa­cil­ity at Tezpur in As­sam, which would man­u­fac­ture a wide range of con­sumer prod­ucts such as cos­met­ics, nu­tri­tional foods and kitchen essen­tials among oth­ers. Re­cently, the Ut­tar Pradesh gov­ern­ment also ap­proved Patan­jali Ayurved's Rs 2,000 crore in­vest­ment in the state, which in­cludes a 450-acre food park on the Ya­muna Ex­press­way. The Tezpur fa­cil­ity in As­sam will pro­vide em­ploy­ment to around 5,000 peo­ple,while the plant in UP will pro­duce goods worth Rs 25,000 crore an­nu­ally. It is ex­pected to gen­er­ate around 10,000 direct jobs that can ben­e­fit nearly 50,000 fam­i­lies.

Patan­jali fo­cuses on herbals. What are plans for this seg­ment?

The com­pany has am­bi­tious plans to launch herbal medicines and prod­ucts soon and ex­ten­sive re­search has been car­ried out for that. The raw ma­te­rial is a very crit­i­cal com­po­nents for pro­duc­tion and to meet the grow­ing de­mand of Patan­jali’s ex­ten­sive range of prod­ucts. There­for, to ad­dress this chal­lenge for herbal prod­ucts, the com­pany would un­der­take ad­e­quate herbal cul­ti­va­tion as well and a plan for that is ready.

Farm­ers have been ex­ploited by the cor­po­rates and at lo­cal mar­kets ( Man­dees). Do farm­ers get ad­e­quate price for their pro­duce from Patan­jali?

Along with the con­sumers of the coun­try, the com­pany is fully re­spon­si­ble to­wards farm­ers from whom it sources raw ma­te­rial. We as­sure them a min­i­mum sup­port price which is nor­mally higher than the ex­ist­ing mar­ket price. We en­sure re­mu­ner­a­tive price for their pro­duce. We make it very clear to farm­ers that if they pro­duce a par­tic­u­lar agro prod­ucts which we re­quire, they will get a min­i­mum price which would be re­mu­ner­a­tive.

Mar­ket sources says you are one of rich­est CEO with with an es­ti­mated wealth of Rs. 25,000 crore. For good cor­po­rate gov­er­nance, would Patan­jali come up with an IPO?

We are en­joy­ing the way we are go­ing for­ward. This is an un­listed com­pany and if it has been placed in world's rich­est com­pany, then it is a big thing. This has been pos­si­ble be­cause of the im­mense love and sup­port that we re­ceived from the peo­ple of the coun­try. Very soon Patan­jali will be at the num­ber 1 po­si­tion. We are achiev­ing two-three times more than the set tar­gets for a year.

On IPO, I would say there no im­me­di­ate plan for this. We are not into prof­i­teer­ing. Once listed your fo­cus would be on mak­ing prof­its for share­hold­ers.

Right now we are en­joy­ing do­ing ben­e­fi­cial things for the na­tion, for the farm­ers and our con­sumers.

We will con­tinue to do that. A large chunk of in­come goes to char­ity. We feel that Patana­jali is ac­count­able to the Na­tion and its peo­ple.

Tezpur fa­cil­ity in As­sam will pro­vide em­ploy­ment to around 5,000 peo­ple,while the plant in UP will pro­duce goods worth Rs 25,000 crore an­nu­ally. It is ex­pected to gen­er­ate around 10,000 jobs

You em­pha­sise on Econ­omy of Scale to cope up with rapidly grow­ing de­mand and low­er­ing the pro­duc­tion cost. How would you achieve this?

We al­ways set am­bi­tious tar­gets and achieve more than that. You would see our re­sults for Fi­nan­cial year 2016-17. But peo­ple do not re­alise, time, energy and money in­volved in the back­end pro­duc­tion pro­cesses. To make qual­ity prod­ucts and make avail­able them at af­ford­able price is a chal­lenge and we are do­ing that per­fectly. With grow­ing de­mand, we would fo­cus on econ­omy of scale and that will give us lead in the mar­ket in terms of qual­ity and af­ford­abil­ity.

Fo­cus of Patan­jali is on Swadeshi, how is it aligned with for­ay­ing into global mar­ket?

When we open a plant, say in Nepal, the neigh­bour­ing coun­try’s swadeshi spirit is not com­pro­mised. There are plenty of herbs and other raw ma­te­ri­als, but pro­cess­ing units are lack­ing. By set­ting the plant there, the com­pany will pro­vide fair price to the farm­ers and cre­ate huge job op­por­tu­ni­ties for the lo­cal peo­ple. As I em­pha­sise on char­ity, a por­tion of in­come from this plant would also go for pro­mo­tion of Yoga, Ayurved and ed­u­ca­tion in Nepal.

What are new ar­eas and prod­ucts, the com­pany plans to en­ter in?

Se­lec­tion of new prod­ucts de­pends upon de­mand. Huge de­mand for our ex­ist­ing prod­ucts is a driv­ing force for us and en­cour­ages us to foray into new cat­e­gories. Apart from herbal medicine and cul­ti­va­tion, we plan to en­ter into ed­i­ble oil in a big­ger way. We have mus­tard oil and go­ing for­ward we will be adding other prod­ucts like rice bran. One thing I would like to make it clear that here we would not go for chem­i­cal process. Our prod­ucts will be made through non-chem­i­cal pro­cesses. That would be a ma­jor dif­fer­ence. Qual­ity and af­ford­able price re­main our mis­sion for each cat­e­gory of prod­ucts.

To make qual­ity prod­ucts and make avail­able them at af­ford­able price is a chal­lenge and Patan­jali is do­ing that per­fectly. With grow­ing de­mand, we would fo­cus on econ­omy of scale